Irish tech companies hit record high in Q2 VC investment

30 Aug 2021

Nicola McClafferty. Image: Fennell Photography

The Irish Venture Capital Association survey found that international funding represented 70pc of all investments, a significant increase from last year.

Venture capital investment in Irish tech companies has reached record highs in the second quarter of this year, with the life science, software and fintech industries attracting most funding, a survey has found.

According to the VenturePulse survey from the Irish Venture Capital Association (IVCA), VC funding in Irish tech companies was €392m in Q2 2021 – up 7.6pc from last year’s €363.8m, which was a record itself.

The survey, published yesterday (29 August) in association with William Fry, also found that investment in the H1 period rose to €641m, up 8pc over last year’s €593m.

Much of the investment in the first half of 2021 was spearheaded by international VC firms, which represented 70pc of all international funding and increased by 55pc on the same period last year.

“This is a strong endorsement of the high quality of Irish tech companies and reflects a global interest in them,” said Nicola McClafferty, chair of the IVCA.

Life science companies emerged as the top destination for investments, representing 43pc of the total mix. Software companies were next in line, bagging one-fifth (20pc) of all investments, followed by fintechs (12pc), ICT companies (6pc) and deep-tech companies (4pc).

Health-tech start-up LetsGetChecked’s $150m funding round in June and finance platform Wayflyer’s $76m funding round in May were among the investments valued higher than €30m in Q2. Growth in this deal-size (up 34pc) reflected a trend in larger investments seen across Europe.

More domestic funding required

Looking at the half-year period, IVCA director-general Sarah-Jane Larkin said that investments in the range of €5m to €10m fell in total value by 10pc to €77.7m. This was the only deal range to drop in the first six months of the year. However, Q2 marked a fall of 47pc in deals ranging from €1m to €5m, totalling €21.6m, and a 42pc drop in the number of deals in this range.

“We hope this was just a temporary blip as the half year performed well with an increase of 15pc in the €1m to €5m range to €91.9m, and a rise of 19pc in the number of deals from 37 to 44,” said Larkin.

Deals below €1m, largely comprising investment in start-ups and early-stage companies, rose by 22pc in the first half of the year to €26.2m. The number of deals rose by 16pc to 64.

In response to the VenturePulse figures, McClafferty flagged concerns around the overdependence on international VC investment, which mostly comes from the US.

“The worry is that international investment is cyclical and when the tide goes out we will be unable to replicate these funds,” she said.

“We should be looking now to increase the supply of funding from domestic non-traditional VC investors such as pension funds, private investors and corporates as is happening across the UK and other European countries.”

McClafferty suggested that this problem can be solved without any Government expense by establishing a working group to advise on how best to implement this ahead of Budget 2022.

Updated, 9.50am, 30 August 2021: This article has been amended to correct the figures pertaining to international investment and statements regarding large deal-sizes.

Vish Gain is a journalist with Silicon Republic